DDE

Sports Betting Legalized; Churchill Downs Has Leg Up on Rivals

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In a landmark decision, the US Supreme Court ruled that states could legalize sports betting. We expect this to be a positive catalyst for several gambling-related equities, and many are moving fast to capitalize on the development. We’re taking a long-term view on potential ramifications and are not jumping head-first into any potential opportunities…yet. By Brian Nelson, CFA On May 14, 2018, in a 6-to-3 ruling, the Supreme Court of the United States ruled in Murphy v. National Collegiate Athletic Association that states could legalize sports gambling. The decision overturns the Professional and Amateur Sports Protection Act, a previous 1992 decision. The implications on a state by state basis have yet to play out, but we’d expect many states, including … Read more

Gaming: From Las Vegas to Macau and Beyond!

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The Valuentum analyst team talks the casino and online gaming industries from the Las Vegas strip to the vast market in Macau. Online poker, sports betting, potential tax breaks, and Churchill Downs’ Kentucky Derby are topics of interest. Remember: In this industry, “the house always wins.” ~14 mins. If you cannot view the video below, please select the link here or view the transcript that follows. Brian Nelson, CFA: The gaming industry is a profitable one, but the gaming industry is also particularly sensitive to discretionary consumer and corporate spending and can be impacted by both the ups and downs of the economy. One particular aspect of explaining this dynamic is looking at Nevada’s gaming industry itself, which while gaming … Read more

Dividend Cushion Ratio Predicts Two More Cuts

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Forward-looking, cash-flow based dividend analysis has proven its worth once again. Chesapeake Energy (CHK) recently suspended its dividend, and Hi-Crush Partners (HCLP) has significantly cut its dividend. In each case, the Dividend Cushion ratio appropriately warned members. Early in July and prior to the elimination of its dividend, Chesapeake Energy ranked near the top of our list of dividend yields to avoid. Based on its Dividend Cushion ratio of -7.7, we rated its dividend safety as VERY POOR, and its dividend growth potential rating was also VERY POOR. The firm updated its financial strategy July 21 and eliminated its common stock dividend, effective in the third quarter of 2015. A reduction in investable capital due to the weak commodity price … Read more

Dear member,

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We have been blown away by the attention we’ve received from our warning on Kinder Morgan’s (KMI) valuation and dividend health. Our duty as an independent research provider has never been held in higher esteem as we outlined the prevalent hazards that reside both with sell-side research inundated with conflicts of interest and credit rating assessments that are paid for by the company. Independence will always trump biased analysis, and investors of all types have applauded us for this. We thank you. But being in the spotlight is nothing new for us. In the short history of the Dividend Cushion methodology, we have called in advance the dividend cuts on a few dozen equities: SeaDrill (SDRL), SuperValu (SVU), Roundy’s (RNDY), … Read more

Putting the American in American Pharoah?

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Image: American Pharoah at the start of the race at Belmont. Source: Diana Robinson Last year left a bad taste in the mouths of horseracing fans across the globe. California Chrome had come off two fantastic wins in the Kentucky Derby and Preakness Stakes in order to position itself for a chance to make history by becoming the first Triple Crown winner in 36 years! The last thoroughbred to take home such an honor was Affirmed in 1978. For those that may not follow the “sport of kings,” to win the coveted Triple Crown, a three-year-old horse must win the Kentucky Derby in Louisville on the first Saturday in May, the Preakness in Baltimore, Maryland, two weeks after that, and … Read more

A Sneak Peek at Valuentum’s Slides for the AAII Presentation in Chicago This Saturday!

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Let’s take a sneak peek at President Brian Nelson’s slides for this weekend’s presentation in Chicago! Firms mentioned: MSFT, GOOG, AIR, BRCM, CSCO, SPY, AAPL, QCOM, MA, DPZ, SVU, RNDY, DDE, STRA, EXC, CLF, PBI, CTL, JCP and others. <select image to download the slide deck>

Gaming Troubles: Macau Gaming Revenue Under Pressure

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Gambling in Macau, the Las Vegas of China or the “Monte Carlo of the Orient,” continues to fall, with September likely marking the fourth consecutive month of declines. According to some estimates, the gaming revenue drop in September will be in the double-digits. There are several issues plaguing Macau and driving uncertainty for many of the operators. Casino City Times perhaps said it best in their piece: Macau mired in cold streak: The mainland Chinese government is on an anti-corruption crusade, which has frightened off some high-end customers. Meanwhile, new visa restrictions implemented by Beijing have slowed visitation from neighboring provinces. A smoking ban on mass-market gaming floors will be implemented Oct. 6, adding uncertainty to revenue trends. Also in … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

The ‘House’ May Be Giving A Little Bit Back This Thanksgiving; It Did in October

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The Gaming Control Board of the state of Nevada released its gaming revenues and collections Wednesday. For the month of October 2013, Nevada’s nonrestricted gaming licenses reported a total “gaming win” decrease of 2.58% compared to October 2012. Las Vegas strip revenue declined 5.06% from the same period a year ago. Though “gaming win” has still advanced 1.52% from July through October of this fiscal year versus last year’s mark, the decline in the month of October still compares to a 7.41% increase in September and an 11.17% increase in August, signaling a marked change in the trajectory. It’s worth noting that year-over-year fluctuations should be expected (as total “gaming win” declined nearly 8% in July of this year), but … Read more

Ladies and Gentlemen

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What you are witnessing with the Valuentum Dividend Cushion is not a normal occurrence in finance. I personally have never seen a metric with such a high level of efficacy in predicting dividend cuts. Last week, the Valuentum Dividend Cushion not only added CONSOL Energy (CNX), but it also added Weight Watchers (WTW) to the growing list of firms that it highlighted the significant risk of a dividend cut before it happened. Weight Watchers suspended its quarterly cash dividend to generate annual cash savings of about $39 million October 30. Both CONSOL Energy and Weight Watchers were highlighted in the October 1 edition of our Dividend Growth Newsletter (on page 12) as yields to avoid (download pdf here).   A Valuentum Dividend Cushion … Read more